Many millionaires are made from ordinary people who practice specific financial habits consistently over time. Here are ten habits to get yourself started on the path to becoming a millionaire and achieving financial freedom. How many of these habits are you already practicing?
As a society, we are obsessed with how the “other half” lives. And while, of course, there are outliers, the reality is that many wealthy people don’t live as lavishly as you see on TV. In fact, many millionaires are hiding in plain sight, and you would never expect them to be wealthy.
These are ten habits of wealthy people you can adopt today.
1. Drive Used Cars
According to Consumer Reports (and Dave Ramsey), leasing a car is the most expensive way to operate a vehicle. You may be surprised to learn that many millionaires purchase gently used cars instead of driving them off the lot brand new and taking such a large hit on the depreciation.
2. Don’t Carry Debt
One of the biggest barriers to wealth is debt. When you have debt, your income is not your own. You must give a portion of each paycheck away to your debtors. When you are debt-free, your money is your own, and you can use it to build your wealth.
3. Have Multiple Income Streams
Many millionaires focus on diversifying their income. Having just one income stream can leave you vulnerable if something happens that causes that income to disappear. Creating multiple income streams, however, can protect your budget and ensure financial stability.
4. Don’t Buy Expensive Homes
Unlike vehicles, many homes appreciate in value. Billionaire Warren Buffett, for example, still lives in the same house he purchased for only $31,500 in 1958. It’s a beautiful home, now worth more than $600,000 but with a net worth estimated at around 80 billion dollars; clearly, he could afford to live in something much more elaborate.
Not all wealthy people want to spend a lot of money on their homes. Many are quite happy living in a comfortable house equal to a small amount of their net worth. This allows them to spend their money on other things in life that they value.
5. Invest Consistently
Many of you are probably already investing in some way. Perhaps your employer offers a 401K or a pension plan you’ve been participating in, and if so, that’s great.
See, many of us invest but often stop when “life happens.” Maybe your transmission goes, or you switch careers to take a break, but the wealthy invest consistently. They pay themselves first, always.
Consistency is key. If you’ve never heard of a magical concept called compound interest, do yourself a favor and Google it…it’s pretty amazing.
Compound interest can make you wealthy. But every month, year, or decade you’re not investing; you’re literally losing money. The wealthy invest consistently and make their money work for them.
6. Focus on the Future
Wealthy people are future-focused. This means they make decisions based on how they want to live in the future, instead of what they want to have now. Wealthy people are willing to make short-term sacrifices for long-term gain.
7. Earn While You Sleep
Wealthy people often get that way because they’ve figured out how to earn a passive income. This means they make money even when not actively working; therefore, it’s considered passive income.
This is important because we have a fixed amount of time each day, the same 24 hours as everyone else. Even if you’re working at a regular job for 16 hours a day, you can only earn a finite amount of money because you only have a finite amount of time to work.
Wealthy people are able to find a way to stop trading their time for money. Finding a passive income stream will allow your money to work for you even when you’re not working for it – so essentially, you can earn money while you’re sleeping.
8. Live on a Budget
If you’re currently trying to get out of debt or save up for a large purchase, you are likely on a budget. Many wealthy people continue to budget their money. Often in a less strict format, but they are paying attention to what they earn and what they spend.
Knowing where every dollar is going and having a good sense of how you’re spending will lead you to be more intentional and less impulsive with how you spend your money.
9. Become a Life-Long Learner
Many millionaires are continuously learning throughout their lives. They read books, educate themselves about new investment options, and are open to being educated and adopting new ways of thinking.
10. Give Generously
Many wealthy people give generously to help others. Having a scarcity mindset leads people to think that they have to “hold on” to the money they make, or they will lose it. Most wealthy people know there is always more money to be made.
There are many theories about giving. Maybe you believe in tithing or that “good begets good.” Perhaps you think that once you have more, you can give more. But most people who give consistently will tell you it’s enriched their life, and they’ve experienced even more blessings.
Ditch Negative Habits
There are many more habits of wealthy people outside of this list.
While you may be far off from becoming a millionaire today, making new positive habits and leaving behind old behaviors and patterns that don’t serve you will get you started on the path to becoming wealthy.
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